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Delcath(DCTH) - 2024 Q1 - Earnings Call Transcript
DCTHDelcath(DCTH)2024-05-14 18:16
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Financial Data and Key Metrics Changes - The company reported US revenue of 2millionfromHEPZATOand2 million from HEPZATO and 1.1 million from CHEMOSAT for Q1 2024, compared to 0.6millionforCHEMOSATinthesameperiodof2023[5][38]−Grossmarginswere710.6 million for CHEMOSAT in the same period of 2023 [5][38] - Gross margins were 71% in the first quarter, with a non-recurring positive adjustment for standard cost reevaluation; without this adjustment, gross margins would have been approximately 60% [18][31] - Selling, general, and administrative expenses increased to 8.8 million from 4.2millionduetocommerciallaunchpreparations[39]BusinessLineDataandKeyMetricsChanges−ThecompanyendedQ1withfouractivetreatmentcenters,whichincreasedtosixbythedateofthecall,withplanstoreach20activecentersbytheendof2024[7][10]−TheaveragetreatmentspercenterareprojectedtorampfromapproximatelyonepermonthtotwotreatmentspermonthbylateQ42024[30]MarketDataandKeyMetricsChanges−Thecompanyhasengagedover30centersinvariousstagesofbecomingtreatingcenters,indicatingincreasedinterestfromhealthcareproviders[9]−TheestablishmentofapermanentJ−codeeffectiveApril1hassimplifiedthereimbursementprocess,leadingtoincreasedwillingnessfromformularycommitteestoapproveHEPZATO[29][55]CompanyStrategyandDevelopmentDirection−Thecompanyaimstobuildastrongcommercialfoundationinmetastaticuvealmelanomatofundfutureclinicaltrialsandexpanditsnetworkoftreatingcenters[33][34]−PlanstoinitiateclinicaltrialsforHEPZATOinothertumortypeswithinapproximatelyayear[35]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinachieving4.2 million due to commercial launch preparations [39] Business Line Data and Key Metrics Changes - The company ended Q1 with four active treatment centers, which increased to six by the date of the call, with plans to reach 20 active centers by the end of 2024 [7][10] - The average treatments per center are projected to ramp from approximately one per month to two treatments per month by late Q4 2024 [30] Market Data and Key Metrics Changes - The company has engaged over 30 centers in various stages of becoming treating centers, indicating increased interest from healthcare providers [9] - The establishment of a permanent J-code effective April 1 has simplified the reimbursement process, leading to increased willingness from formulary committees to approve HEPZATO [29][55] Company Strategy and Development Direction - The company aims to build a strong commercial foundation in metastatic uveal melanoma to fund future clinical trials and expand its network of treating centers [33][34] - Plans to initiate clinical trials for HEPZATO in other tumor types within approximately a year [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 10 million in US quarterly revenue by the end of 2024, which would trigger a warrant exercise resulting in 25millioninproceeds[11][48]−Thecompanybelievesitscurrentfinancialresourcesareadequatetofundoperationsuntilitbecomescashflowpositive[17]OtherImportantInformation−ResearchanddevelopmentexpensesforQ12024were25 million in proceeds [11][48] - The company believes its current financial resources are adequate to fund operations until it becomes cash flow positive [17] Other Important Information - Research and development expenses for Q1 2024 were 3.7 million, down from 4.7millioninQ12023,primarilyduetodecreasedclinicaltrialactivities[49]−ThecompanyendedQ1with4.7 million in Q1 2023, primarily due to decreased clinical trial activities [49] - The company ended Q1 with 27.2 million in cash investments, with cash used in operations approximately 9.6 million [47] Q&A Session Summary Question: What is the realized revenue per KIT sold? - The revenue for Q1 reflects 11 KITs sold, with pricing at 182.5 per KIT [40] Question: Is the growth in EU revenue sustainable? - The company expects continued growth in Germany, which has a consistent reimbursement form, but overall growth may vary [50] Question: What is the expected gross margin at peak revenue? - At peak revenue, gross margins are expected to approach close to 90% [51] Question: How is the patient profile of treated patients? - The company is seeing a mix of first-line and subsequent-line patients, with no trends of patients dropping off early [85][86] Question: What is the status of reimbursement and J-code effectiveness? - The J-code has simplified the reimbursement process, making it more predictable for hospitals [55] Question: How will future R&D be funded? - The company plans to fund R&D through its P&L, aiming to avoid excessive dilution from fundraising [73][74] Question: What is the current status of referrals from general oncologists? - The focus is on opening treatment sites and ensuring oncologists at those sites refer their patients for treatment [81]